What is Economics, Broadly?

I am an economist. Economics is about getting stuff. Since it involves production, it necessarily deals with how we relate to material things, including land, fresh water, oceans; all the stuff we gather and grow. Since it looks at consumer demand, it necessarily examines what we want, how our desires and our relations with others shape our world and the things for which we strive. As an economist I look at all these things.

Most economists take views of these things that are simultaneously much narrower, and much broader. Their examinations of production and distribution focus narrowly on markets and how they work. At the same time, they treat goods, services, labor, and land as broad general categories, the specifics of which matter little. I don’t take these views. Economics is about getting stuff, and any matters that relate to such things falls within the rightful realm of economics. To ignore non-market production is to relegate to ignorance a good deal of how humans spend their time in production. To treat land as a mere commodity is to ignore how humans related to their natural resource base for tens of thousands of years. To take preferences as given is to ignore the historical development of ethical systems and social relations. All of these realms influence production immensely; if you want to understand production, you must address them to some degree.

To put it another way, humans are not disconnected beings, handed a set of preferences, making disembodied optimization decisions, treating other factors of production (including other people) as mere commodities. Why is it that economists are satisfied with knowing “ a demand relationship” (between price and the quantity demanded) and “a supply relationship” (likewise, between price and quantity supplied), calling that a market that tells us equilibrium price and quantity, and more-or-less being done at that point? These factors in-and-of-themselves actually tell us so little about what gets produced, distributed, and consumed, even within a single market. I’m not speaking here in a philosophical sense; if you want to know what really determines our production and consumption of, say, apples, you have to look at so much. And when you want to look more broadly at “the economy,” you have to recognize, study and come to know so much.

Take, for example, what might be called a mid-level[i] (relative to “apples” and “the economy”) economic issue, health care in the United States. To understand this issue, there are a number of very useful economic concepts and models. But in exploring this issue, one soon realizes that to even have a hope of understanding this issue in any useful way, to avoid looking like a fool in public discourse (which many economists have done), one must delve into issues such as how we view and conceptualize health, how our bodies relate to the rest of our lives, how men and women[ii] might see these things differently, how we view the role of government, society, our local community, and friends and family in the provision of health. Indeed, we must examine what it fundamentally means to have a good life, and the degree to which we have a personal responsibility in achieving it; we probably have to look at existential questions of how we relate to the universe. To say that the production, distribution, and consumption of health care can be understood merely in the context of markets and sources of market failure such as adverse selection and moral hazard is to parse the issue in a highly subjective manner. Looking at health care issues as objectively as we can, it hardly seems that adverse selection and moral hazard are even very central. Oh, they’re out there, to be sure…but hardly central.

When I teach economics, I am forced to stay relatively narrowly within the bounds of what is considered “economics.” I’ve competently (I believe) expanded this realm to include non-market cooperation, issues of sustainability (ecological economics), and historical examinations of economic systems such as capitalism, but both the relative levels of my expertise and the expectations of my professorial peers at my home institution prevent me from further expanding what I teach. However, when I consider economic issues, when I seek to understand and explain the production, distribution, and consumption of stuff, I necessarily incorporate much broader perspectives, and delve into much broader knowledge, arguments, and perspectives. Let me be emphatic: I do not explore beyond the traditional boundaries of economics because I find such things merely interesting, intellectual curiosities, nice themes to explore alongside economics; no, they are central to truly understanding the production, distribution, and consumption of goods and services.

In many ways, I suspect, this necessity is similar to that of the physicists, whose discoveries take them ever further to smaller particles, earlier points of time, and more amazing and esoteric possible explanations of how it all works. The physicists did not stop at billiard balls and say, “oh, atoms, that’s someone elses business.” Nor did they stop at electrons or quarks or linear time or single universes; the field of cosmology now necessarily includes heavy doses of philosophy. Why should the economists stop?

Examining what I call economics broadly[iii] can be very useful in better understanding apples or health care, but I confess that I am drawn to the larger and more general scale of questions concerning “the economy.” At first blush, this means we’re discussing macroeconomics, and my first inclination is (or was) to reject an association between “the economy” and “macroeconomics,” because I want to move well beyond issues of growth, unemployment, inflation, policies of central banks, etcetera. However, a few moments of reflection suggest that it is indeed “macroeconomics,” because it remains the study of aggregate economic activity. It’s just that the study of macroeconomics broadly requires exploring many “micro” issues. Understanding economic growth means understanding human desires for more, which…my, one must pause to consider the immensity of issues regarding human desires for more; there are a lot of ideas in that realm. And is still a relatively small slice of the issues surrounding “the economy.”

But I am not suggesting that economics become “the study of everything.” It merely needs to go where it needs to go, where it will find the most fruitful (indeed, efficient) explanations. I am suggesting that some of these intellectually efficient places lie outside of traditional economics. It’s been said that economists want to be physicists. So let’s be like them, and go where we need to in order to explain our main concern, the production, distribution, and consumption of stuff.

In fact, to fully grasp why we produce, distribute, and consume the way we do, I have found several key realms that are very useful to include in economics broadly. Because work and consumption are both so important in the economy, I explore why we work, what work means to us, and why we consume what we do, why we seem driven to have so much stuff. Because our production so often seems to separate us from the natural world, involving both extreme alienation and apparent[iv] resource exhaustion, I can’t help but explore how we relate to nature, including archaic and non-Western modes. Put another way, our selves, our happiness, our relationship to the physical world, are central human questions, and the production, distribution, and consumption of stuff are central human activities; you need one to understand the other.

What is particularly fascinating, but shouldn’t be surprising, is that these realms interrelate.

[i] If I wanted to sound slightly more esoteric or intellectual, I might write “mesoeconomic” or something like that. I resist such elitist articulations.

[ii] Just the tip of the iceberg here, in terms of exploring how different identities relate to health.

[iii] It might seem to make sense to use the term “broad economics,” but my sense is that “economics broadly” connotes a more active, less passive, on-going consideration. I think this is appropriate.

[iv] This word is critical; “running out” of resources is a complex thing.